Community activists are launching a national campaign to pressure banks, securities firms, and insurance companies to donate at least as much as they pay their five top executives.
The activists, led by the Organization for a New Equality, the 21st Century Partnership, and the Greenlining Institute, want the contributions to benefit low-income and minority neighborhoods.
"The banking community needs to pay closer attention to how its bottom line impacts the bottom line of communities," said the Rev. James H. Daniel, who leads the 21st Century Partnership in New York. "There is a pattern emerging of greed that is superseding the need that the corporate institutions have to help take care of those who are less fortunate."
Mr. Daniel said the groups are particularly worried that newly merged companies will not contribute as much as the two companies gave before the merger. The coalition will conduct a study during the next six months to track what has happened to charitable giving after banks combined, he added.
The coalition's first target is Bankers Trust New York Corp., which is the midst of a merger with Alex. Brown.
In June 2 letters to Treasury Secretary Robert Rubin, Federal Reserve Board Chairman Alan Greenspan, Senate Banking Committee Chairman Alfonse D'Amato, and House Banking Committee Chairman Jim Leach, the groups said Bankers Trust's top five officials earned a combined $72.9 million last year, with chief executive Frank Newman making $17.9 million. But it said the bank's charitable giving was less than $10 million, with only $500,000 in contributions to African-American groups.
"In our opinion, this $72.9 million compensation package occurred at the expense of the bank's mandate to serve our flocks," the activists wrote.
Bankers Trust officials rejected the criticism, noting that the bank has received three consecutive "outstanding" Community Reinvestment Act grades and recently raised $130 million to finance homes for moderate-income families.
"Bankers Trust maintains a strong and continuing commitment to forging new ways to bring capital to our poorer communities," the bank said in a prepared statement. "Complaints challenging this commitment and our record of community service are simply not supported by the facts."
Banking lawyers warn that community groups could challenge a bank's performance under the investment test in the revised CRA rules if they are not satisfied with the level of contributions.
"When community groups protest, they try to throw as much mud as possible," said Francis X. Grady, a partner at the Cleveland law firm Grady & Associates. "They will hope that charitable giving is some portion of the mud that sticks to the wall and results in a negative evaluation."